SHANGHAI, Sept. 27 (SMM) -- SHFE lead prices opened down RMB 400/mt at RMB 14,035/mt on Monday negatively affected by plunging LME lead prices last Friday, with prices mainly moving between RMB 14,100-14,200/mt in the morning session. Since LME lead prices sank and domestic stock markets plummeted in the afternoon session, SHFE lead prices fell further to RMB 13,595/mt, with prices finally closing at RMB 13,630/mt, down RMB 840/mt or 5.8%. Trading volumes increased by 1,318 lots to 3,636 lots, while positions increased by 584 lots to 3,242 lots.
As SHFE lead prices moved around the daily moving average after opening significantly lower on Monday, quotations for domestic well-known branded lead like Nanfang, Chihong Zn & Ge and Yuguang were between RMB 14,150-14,230/mt, with zero discounts against SHFE 1111 lead contract prices. Downstream consumers showed strong interest in purchases at lower prices, but goods were unavailable in the market, with deals mainly made between traders. SHFE lead prices dipped further in the afternoon business, and spot lead prices fell to RMB 13,750/mt in response. Lower prices depressed trader sentiment, keeping market transactions muted.
With regard to lead price trends for this week, 40% believe that as macroeconomic condition is deteriorating, and as European debt crisis is expanding, the US dollar index should continue to rise due to improving risk aversion appetite. Transactions in domestic market will remain quiet due to cash problems at the end of the month, so they are pessimistic, anticipating spot lead prices will likely fall below RMB 14,000/mt.
40% believe any positive news released from the G20 meeting will help ease market concerns, while any possible negative news released will cause currencies with high interest rates to fall sharply. In this context, SHFE lead prices should move between RMB 14,000-14,500/mt.
The remaining 20% are optimistic. As prices had fallen noticeably last week, and the Euro zone will finally take action as October 3rd is the deadline of Greek debt issue, and with good news still possible. Meanwhile, a large number of shorts leaving the market at the end of the month will push up SHFE lead prices to some extent, so lead prices should rebound. In addition, downstream buyers will replenish stocks modestly. But SHFE lead prices will not rebound remarkably given current global economic condition, moving between RMB 14,400-14,700/mt.